Wednesday, June 20, 2012

IHH: Tell me who is to make the most out of this IPO

Not the employees, not the doctors, not Khazanah really if you study it properly, but perhaps CIMB!

Besides being the lead arranger and many other things (from advising on other programs prior to this IPO), this is what I gather from staffs of IHH.

They will not know the quantum of shares they are being offered until 4 July. From that date, they have until 9 July to subscribe which is 3 working days to pick up, arrange for financing or preparing for their own funds;

To apply for loan which will be offered via CIMB, the processing fee to be charged will be a flat RM130. The bank has advised those who will be offered shares to apply for the financing now, as they have very limited time to pick up once offered. This is basically pushing them towards the financing option. Assuming there are 10,000 staffs being offered and all of them are opting for the financing package from CIMB, the bank will net a cool RM1.3 million just from this non-risk income;

Financing rate will be BLR - 1.6% = 5.0% via CIMB;

The financing is only for six months, upon which if it is not paid, CIMB has the right to force sell the shares.

Now my question to IHH is why the short time frame given to the staffs and partners on the quantum they will be offered. The short time frame will not help them to arrange for financing themselves even if they have the money. Is the time frame provided as such so that they will not have much other options but to go for financing from CIMB? Then my question is already CIMB is making much from elsewhere in this IPO, why the need to make the RM130 for processing the loan from every individual?

Already CIMB is to be appointed for being the price stabilization manager (which also means they can support the price for you retail to sell in the short term). From here, the bank will be paid for stabilizing or rather preventing the shares from going below the issue price. Hence the risks is theirs to control. Why the need to overcharge the staffs (whom consists of nurses and other lower level staffs) as hospitals hire quite a bit of non-executives.

You know what pisses me off. There is no necessity to charge the flat processing fee from the working class as CIMB is already earning from the interest to be charged onto the employees. What is Bank Negara's stand in this? Is this how Malaysian banks are making money from the public? Why the need to only inform them of their entitlement on such a late notice?

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